Bosnia gets $35.5m loan from EBRD to help banking system weather pandemic

SARAJEVO, Oct 27 (Reuters) - The European Bank for Reconstruction and Development signed a 30 million euros ($35.5 million) loan agreement with Bosnia on Tuesday to protect its banking system from risks posed by the health crisis, the finance ministry said.

The funds will be kept as reserve assets at the country's state Deposit Insurance Agency, which will provide stand-by arrangements to banks in the form of credit lines available under specific conditions, a ministry statement said.

Finance Minister Vjekoslav Bevanda said the funding was crucial during a pandemic when the economic outlook is suffering and banking sector facing business risks. The loan also means that Bosnia will have a reserve credit line as requested by the International Monetary Fund, he added.

The EBRD has forecast Bosnia's economy to contract by 5% this year.

The loan will have eight-year maturity, with a five-year grace period on the payment of the principal loan. ($1 = 0.8461 euros) (Reporting by Daria Sito-Sucic; Editing by Mike Harrison)